The Alarming Reasons Why People With High Incomes Still Feel Poor

3 min. read By eCompareMo on
The Alarming Reasons Why People With High Incomes Still Feel Poor

According to the National Economic and Development Authority (NEDA) chief Emmanuel Esguerra, the country’s economic growth is exceeding expectations, as the latest GDP numbers peg us as the fastest growing economy in Asia to date.

Numbers don’t lie so they say—but not in the case of the Philippines. Studies and surveys may have indicated fast-paced progress in the past quarters but its realistic implications are not tangible to many Filipinos.

“The Philippine economy will also remain marked by wide inequalities of income, and the disparity between the richest and poorest households will stay particularly acute,” said the Economist Intelligence Unit (EIU). “Consequently, large numbers of Filipinos will continue to live in poverty.”

That feeling of living on the poverty line despite receiving a competitive compensation is a concerning nuisance people rarely discuss with scrutiny. Below are some points to ponder to give clarity to this baffling financial dilemma.

A pre-existing condition

Being perpetrated with a history of impoverished status is a crucial impediment to many striving individuals. In fact, it is the most trying environment to attain progress.

If your family has always been underprivileged, your income is allotted for financially challenged family members and relatives who count on you for subsidy. Another factor is being succumbed to swelling knee-deep debts incurred and accumulated over the years, which takes more years to pay as well due to ballooning interest rates.

Ris*, for instance, a 28-year-old Corporate Events Manager at an esteemed banking company with a monthly earning of P65,000 per month with P20,000 worth of monthly allowance, is forced to pay the millions-worth debts of his family. “I end up increasing the list of my personal debts because a large portion of my earnings go to my family’s debts,” he shares.

Mind over matter

Financial stagnation is a by-product of one’s money mindset. This is the state of feeling powerless over one’s financial situation, thus hindering one to act on unfavorable financial realities. “Being poor isn’t just a number on a balance sheet. It’s a state of mind,” Eric Ravenscraft confessed on lifehacker.com. “The system is often rigged to make you fail, but one of the worst mechanisms of that system is making you believe that you deserve to be stuck in it.”

You acknowledge the fact that you are poor and dwell on that notion—leaving you feeling shameful and worthless. This happens when one does not have a grip of essential concepts of personal finance.

Tipping the scale

An expected response to inflation of income is adjusting the standard of lifestyle to a spike. The higher your income bracket, the higher the demand to escalate one’s living to a notch up. “It’s no surprise that a higher income can change one’s perspective of want and need,” says financial planner Kacie Swartz.

According to financial planner Kevin J. Meehan, “the challenge is that the higher your income goes, the more variable it becomes, [because] much is based on bonuses, options and commissions. When the income goes down—whether on a permanent or temporary basis—most have little free cash to fall back on.”

Finding your way out

Earning more doesn’t necessarily imply adept financial management. This financial crisis suggests that middle- to high-income earners these days have neither an emergency cushion nor a financial safety net, and woefully lack awareness in handling money.

Frugality is an imperative part of the equation. Earning more does not infer spending more. Arguably, cutting back too far and ending up enjoy nothing is not healthy either. On a positive note, money can enable one to build investments.

“To build wealth, you must defy status quo,” G.E Miller of 20 Something Finance says. He reiterated that spending behaviors is eccentric than one’s actual earnings. “There should not be a direct correlation between how much you earn and how much you spend. If there is, that’s when you get in trouble. Taking it even further, why not work really hard to be good at both? That’s when things can really take off for you.”

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eCompareMo

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